All good points, and I agree 100%.So i just skimmed the thread, but it seems to have devolved into the whole "belts are ego/insecurity/money-making schemes". I get that viewpoint, but don't agree. I've trained in systems/schools both with belts and without. It's very low on my list of priorities when visiting a school, but I do like belts, for a couple reasons.
1. I'm a very organized individual. And can get information overload fairly easily. If I know that, learning something new, at X belt I should be learning Y, that's what I'll do. And then keep learning Y when I move onto Z, but it sets up a progression for me that I'm not having to figure out by myself.
2. I'm human. It is motivating to have something to strive for. I feel a sense of accomplishment when I achieve it, and I know that I have to work harder if either I a: am not offered a promotion/test when I thought I was ready (has happened), or b: failed a test (has also happened). Like I said, I'll still train systems without it, so I don't need that motivation, but having an extra goal is certainly not a bad thing.
3. In line with two-it provides feedback. I've got no issue directly asking an instructor/coach/partner what I'm doing wrong, but I've seen both new and old students that do. Failing/passing/not being tested provides feedback that you're on the right track, or something's amiss, and can encourage people to ask their instructor what their lacking.
4. As an experienced martial artist, it helps when I try out a new school. I immediately know who's experienced relative to the school/class in session. That means that once I work with one or two people, I can estimate the general level of the belts at the school, and have an idea of where someone will be at when I work with them. So if I spar with a few black belts, and they're not all that accomplished, then I spar with an orange belt, I know from the getgo to take it easy. Vs. If I sparred with the same people, I might think that the "black belts" are newer students, and it would take me longer to feel out the school itself.
5. It gives new students clear instructions on who to emulate/listen to. I'm sure we've all seen those people with 3 months under their belt (heh), trying to teach everyone else exactly how to do things. If a new student just came in, they might listen to them over someone with more experience, simply because that other student sounds more confident. If they can see a difference in rank, it makes it easier for them to know who to listen to.
Obviously all of the above have some caveats, it's not perfect and there are negatives of belts. Just thought I'd put in a few reasons why their useful, since I feel like I much more often read all the negatives and not as much of the positives.
However, in the martial arts community, people who "chase belts" are often shamed for it (which I don't agree with), presumably because those belts end up becoming a source of validation, or ego, or whatever.
But can the shoe be put on the other foot to say that consciously choosing a particular art because it lacks a belt ranking system is merely the opposite side of that same coin?
Note that the OP only took issue with the belt ranking system after failing a test. He wasn't trying to seek out a belt-less art before that.